There are so many big issues facing Buyers and Sellers these days.
Two of the most pressing challenges in the province of Ontario are the housing shortage and the lack of affordability of owning a home. Renters were already struggling in an unaffordable housing market before Covid-19 and now the situation is worse.
It’s also critical, in this climate, that you understand the rules around multiple offers. During the latter half of 2020 and throughout 2021, multiple offers were quite common in Collingwood and Southern Georgian Bay.
“For the right house in the right location at the right price, there are still multiple offers in Southern Georgian Bay,” says REALTOR® Barb Picot. “It can be an emotional and trying process, so set your expectations beforehand. Make sure you know and understand the risks and rewards of buying or selling, so that you can make informed decisions about the transaction and any offers on the table. This is a complex process, and it is best to discuss it with a professional.”
With rising interest rates and more inventory coming onto the market, multiple offers are still expected, though not quite as many are coming in as before, if at all. That’s because there are more choices out there now. While there are still more Buyers than Sellers, more Buyers are content to hang out on the sidelines as they can’t afford the higher price points, especially when combined with higher interest rates.
Advice for Sellers
Before you put your house on the market, have a detailed conversation with your agent about what you can do to your house to maximize the price you will receive for it. This could include painting, staging, improving curb appeal and landscaping. Make any minor repairs that are easy to do in order to assure potential Buyers that the home has been well cared for.
If you find yourself dealing with multiple offers, be sure to allow yourself enough time to discuss each one individually and with all parties involved before you decide which one to deal with. Discuss the pros and cons of Buyers’ negotiating strategies ahead of time so that you fully understand the process.
Be wary of overpricing your home. “Properties that are greatly overpriced may end up sitting on the market for a while and may require a price adjustment in a couple weeks’ time, especially with the rising spring inventory. Buyers will then wait to see what the next price adjustment will be—resulting in a price that is lower than it would have been if it was priced correctly at the start,” she says.
Sellers are really the only ones who win when it comes to multiple offers, because if the property is priced properly it can attract a higher price. “There is no true advantage for Buyers, as they may end up paying a higher price than they anticipated,” says Picot.
Sellers do have to be aware that some Buyers can get caught up in the buying process and purchase a property that is beyond their means. When the financing process starts, the Buyers discover that they cannot in fact afford the property and the transaction fails to close, so be sure to scrutinize all of the offers carefully.
Strategies for Buyers
It’s more important than ever that before you go out to look at properties, you should sit down with both a REALTOR® and visit your financial institution to discuss your needs and wants, what you can and can’t afford, and how you will pay for your purchase.
“In today’s market, make sure that you have all of your financing in place before going to look at properties—and that your REALTOR® shows you properties that you can actually afford,” says REALTOR® Barb Picot.
In addition to having all of your financing in order, review all documentation provided by the listing brokerage with your REALTOR®, lawyer and mortgage consultant. This will include financing, status documents and home inspections ahead of the offer process.
“Always put your best offer forward when competing against other offers,” she advises.
Another tip: Sellers are always curious about the Buyers, so any favourable information your REALTOR® can give the listing brokerage about you, that you want to disclose—including why you want or need this house—could be very beneficial.
Remember to be realistic. “There will always be a winner and a loser,” says the agent. “Buyers and Sellers should appreciate that in multiple offer situations, only one offer will result in a sale and others will be disappointed that theirs was not accepted. Little can be done to make this disappointment easier, but fair and honest treatment throughout the process, together with ongoing, prompt and open communication, can enhance the feeling that all Buyers, whether they were successful or not, will feel they were treated honestly and fairly. You need to be persistent and don’t give up: the right house is out there waiting for you; you just haven’t found it yet.”
You may have to lower your expectations re: the price points you are looking at if you want to stay in a particular market. You might start looking in another location that is close to where you want to be. You definitely don’t want to be looking at and participating in markets where you are uncomfortable or cannot afford the purchase price.
The Ontario government recently announced that they are introducing regulations to end blind bidding in multiple offers on real estate transactions. The proposal is that Sellers get to choose whether bids are shared or not. This new regulation comes into effect in April 2023 and is just one measure that the government is introducing to update the Trust in Real Estate Act, which was established in 2020.
“At face value, ending blind bidding should bring more transparency and potentially lower prices. However, the changes may not make housing more affordable. The odds are that prices will continue to increase, though maybe at a slower pace than before, with low inventory in our province still an issue. The details of the new policy haven’t been revealed, and Sellers don’t need to make a decision about the bidding process at this time.”
Says Picot, “We will have to wait and see what the new policy brings next year.”
For more information, contact The Picot Team at 705-444-3452.